FRANKFURT – German reinsurer Munich Re
The world's biggest reinsurer said it would buy back shares worth around 3.6 percent of its market capitalization before its annual shareholder meeting in April next year.
Chief Executive Nikolaus von Bomhard had raised the prospect of a share buy-back earlier this year, and the 1 billion figure is consistent with Munich Re's track record. It bought back on average 1 billion euros worth of its own shares annually between 2006 and 2011.
Chief Financial Officer Joerg Schneider said the move would not harm the company's capital position or its ability to write new business.
It may help cheer investors after a 44 percent drop in net profit in the third quarter, which saw premiums and income from investments both fall by around 5 percent.
Despite being hit by some big localized claims this year, such as hail storms and flooding in Germany, reinsurers have not faced massive payouts for hurricanes or earthquakes, leading many analysts to predict the industry would move to lure investors with improved dividends or share buy-backs.
Global No. 2 reinsurer Swiss Re said on Thursday it would consider a special dividend as a way to return excess capital to shareholders but said it would wait for full-year results before making a decision.
Munich Re shares have risen 13 percent so far this year, underperforming the Dow Jones index of European insurers , which is up 24 percent since January 1.
(Reporting by Jonathan Gould; editing by Noah Barkin and Tom Pfeiffer)